The Power of Robo-Advisories

In the last couple years, the Securities Commission has allowed and regulated a new type of investment product called Robo-Advisories.

These are investment tools that are beginning to remove the human element and introduce more technological aspects in a variety of different offerings. From the way that they actually handle investment portfolios to the way that their app behaves.

Robo-Advisories, in keeping with their Unique Selling Point (USP), are offering retail investors a purely digital choice of investing by balancing limited portfolio selection with low fees.

In today's environment of emphasising the influence and efficiency of technology, investing has finally caught up.

Will this be a threat to the traditional investment players?

Here I want to give 3 reasons Against and For the introduction of Robo-Advisers. No.1 Against: Lack of Operational Confidence

With the recent crash of Robinhood (Robinhood Crash), retail investors must be highly sceptical of the overall impact that a purely digital financial institution can do. You could loose your investments or experience unnecessary stress and inconvenience when going for a totally digital tool.

No. 2 Against: Minimal Human Element

Despite technology being a stronger part of human life, everyone likes to think that there is a human servicing their needs or creating their products. Whether it is a restaurant, plane, or car, people seem to trust a human being more and within traditional financial institutions, there are always people to contact and engage to resolve your own issues.

No. 3 Against: No Active Management

In a traditional house, there will be teams of fund managers and research analysts who will be taking care of your portfolio and have a human eye on the markets. They will be able to put to use their experience and opinion rather than just simply looking at cold data.

No. 1 For: Low Fees

Investment Consultant, Unit Trust Consultant, and Sales Agents charge for their services in a very obscure way and intentionally position the costing in a way that is not clear. This results in your total investment amount taking a hit from somebody who might not be delivering the value needed. Robo Advisers, as they depend on technology and are customer-centric, charge very low fees and are very clear are on how charge everyday investors.

No 2 For: Educating Investors

The investment industry likes to educate consumers of the importance of investing but continually fail to communicate their individual value and the technicalities of their products. Robo Advisers on the other hand are more transparent and empowering as they routinely publish consumer friendly content through articles and events. Another key point is also that their in-app experience are sometimes a lot more friendly to consumers who use smartphones everyday with interactive designs and simple copy.

No 3. For: Great For Passive Investors

For those who don't want the stress of personally managing their investments or just lack the technical knowledge, then Robo-Advisories are for you. Their technology will handle your portfolio for you and will manage it accordingly without you stressing about how the markets are doing.

For those looking to learn more about this growing industry, then read https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/financial-services/sea-fsi-robo-advisers-asia-pacific.pdf.

For those looking to start investing, I personally recommend StashAway because of their US Exposure, In-App Experience, and No Minimum Investment Amount.

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